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The Ned Montarello story is one for the small business textbooks.

West Australian-based Montarello kicked off ThinkSmart in 1996 with his RentSmart business spearheading the venture. These days ThinkSmart is a point of sale financing company listed on the Australian Stock Exchange and Monterello is CEO and executive chairman.

So how did this happen? Montarello saw a neglected market, thanks to the hardnosed attitudes of the banks, and then linked it to one of the greatest threats to business success – the proverbial cash flow crisis.

Then when Montarello made the next important step, cleverly connecting his market-solving ‘proposition’ to a tax deduction, he was staring a business winner square in the face. Of course, there were other hurdles to jump, such as getting the support of major retailers and financial institutions for the millions of dollars needed to make his RentSmart business fly – but he did it.

Recognising that typical small businesses spent around $5000 a year on equipment and that the statistician said there were 1.2 million small businesses at the time, Montarello saw a $6 billion market ripe for the plucking.

“The RentSmart product was therefore born out of the opportunity to meet the needs of the small business person for convenient, fast fuss-free finance in retail stores and, importantly, provide them with a simple path for staying up to date with technology,” Montarello points out.

“Our business model was intended to be portable and scaleable and the niche in which we operate is worldwide – so the opportunity for growth is exciting.”

But starting the business was no cakewalk.

“Like many small businesses I faced those standard start-up pressures – I’d mortgaged my home for capital to finance the business and had no fixed income,” he recalls. “It took four months to set up the product and systems and we took two months after opening before we wrote any business, so that’s a period of time I’ll never forget.”

He also needed funds so that his customers could rent rather than buy their essential equipment.

“I had the monumental task of finding a wholesale funder to take the credit risk on an unproven model and convince them to outsource the approval process for customers to us to provide instant approval at the point of sale,” Montarello explains. “These were the same banks who’d ask a small business to provide them an asset and liabilities statement for a loan to get a $2500 Personal Computer, which was the very issue our business was set up to overcome.”

The challenge of securing a national retailer to position the product took a year, but a bright future looked assured when Dick Smith Electronics took on the product. The RentSmart product is now in more than 750 retail outlets around Australia, in outlets such as Dick Smith Electronics, JB Hi-Fi and Officeworks.

He took smart thinking to a new level in 2003 – the export level – cracking a deal with the Halifax Bank of Scotland and trading with one of the largest electrical retailers in Europe and the UK, Dixons Retail Plc, with whom it continues to partner.

Montarello says that despite very challenging retail conditions the model is resilient and the product attractive.

“RentSmart is a product that does well during challenging times. The strength of our relationships with key retailers is critical and the value-add that RentSmart provides resonates strongly with them.

“Our goal has been to cement ThinkSmart as a leading international provider of point-of-sale finance. We are aiming to move to 100 per cent electronic processing, including e-signatures, and this will allow us to expand our distribution reach with existing retail partners as well as create new online and multi-channel retailer relationships.”

He says the company is well positioned for continued growth. “Our philosophy is growth through cash, performance and aligning with market leading global retailers.”

“We’ve aligned our group resources to enable us to focus on our more profitable, accessible territories and partnerships in the UK and Australia where we see opportunities to gain market share.”

Reflecting on how he built his business, Montarello advises you need a great product, good cash flow and conservative gearing. You also need a strong clear vision communicated to all stakeholders. The vision needs to scare you a little with its ambition, but it will also inform all key decision makers and align paths.

“You need to take advice, plan regularly, be prepared to take considered risks with qualified information before fully backing yourself,” says Montarello.

He also referred to the importance of internal grit.

“I think every person who has built a successful business has an inbuilt determination and self belief in their creation,” Montarello suggests. “You have to refuse to accept failure as an option and as everything is on the line; you can’t give up – you have to make things work.”

This has been a long and successful trip for a son of Italian immigrants and former AMP employee, but it has been one that has been good for both the ThinkSmart business and the many smaller operators and consumers who now have much easier access to technology.